National Blood Authority Bill 2002

Bills Digest No. 106 2002-03

National Blood Authority Bill 2002

WARNING:
This Digest was prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments. This Digest
does not have any official legal status. Other sources should be
consulted to determine the subsequent official status of the
Bill.

Passage History

National Blood Authority Bill
2002

Date
Introduced: 11
December 2002

House:House of Representatives

Portfolio:Health and Ageing

Commencement: The
main provisions commence either on 1 July 2003 if the Bill receives
Royal Assent before that date, or on Proclamation. If the Bill is
assented to on or after 1 July 2003, but is not proclaimed within
six months of the date of assent, it will commence on the first day
after that period.

Purpose

To establish a
National Blood Authority as part of a coordinated national approach
to management of the Australian blood sector.

The National Blood
Authority Bill 2002 ('the current Bill') follows
on from two major government reviews of Australia's blood
sector.

The 1995 Commonwealth Review of the
Australian Blood and Blood Product System resulted in

The formation of a national Blood and Blood Products Committee
to strengthen policy coordination in this area between the
Commonwealth and the States and Territories

The establishment of the Australian Red Cross Blood Service
(ARCBS) allowing the free transfer of blood products across State
and Territory boundaries.

Despite these measures, the then Minister for
Health and Aged Care, Dr Wooldridge MP, said in 1999 that he was
concerned that 'the demand for some processed blood products
exceeds supply to the extent that effective treatment of some
patients is being compromised'. In addition, Dr Wooldridge was
concerned that improvements in overseas blood testing 'might not be
implemented, or worse, implemented in a piecemeal manner across
jurisdictions' due to 'the current split of roles and
responsibilities between the Commonwealth and the
States'.(1)

According to Health Department spokeswoman, Kay
McNiece

There are currently 30 different agreements on
blood supply between the Commonwealth, States and Territories and
the Red Cross .Every state has different regulations on things such
as storage and donation as well. This means that there have been
problems transferring blood between states and some blood has been
sitting in one state's hospitals and may go unused when another
state is desperately in need. The Red Cross has tried to move blood
around the country but a national system will streamline the
process.(2)

Because of such concerns, in 1999 the Minister
established the Review of the Australian Blood Banking and
Plasma Product Sector, chaired by former Governor-General, Sir
Ninian Stephen ('the Stephen Review'). Completed
in March 2001, the primary recommendation of the Stephen Review was
the establishment of a National Blood Authority to draw together
national blood supply planning and management within one
organisation.(3)

In September 2001, the Minister announced that
Australian Health Ministers had agreed on new national arrangements
for the Australian blood sector.(4) The new arrangements
will retain key principles such as voluntary, non-remunerated
donation; national self-sufficiency and provision of blood products
free of charge to patients and other users such as the haemophiliac
community.(5)

The new arrangements will be given effect
through a National Blood Agreement that will be tabled in both
Houses of Parliament.(6) Key elements of the National
Blood Agreement include:

National agreement on the objectives of governments for the
Australian blood sector;

A primary policy setting role for the Ministerial Council (an
extension of the Australian Health Ministers Conference), supported
by a Jurisdictional Blood Committee of senior officials

Joint funding of the national blood supply between the
Commonwealth and the States and Territories on a 63:37 cost-share
basis

A national framework for the management of safety and quality
issues within the Australian blood sector, and

Establishment of a National Blood Authority as a statutory
authority under Commonwealth legislation.(7)

The Second Reading Speech notes that the primary
functions of the National Blood Authority will be 'to ensure
continuity of supply of blood and blood products, and to facilitate
and coordinate national safety, quality and related information
systems on behalf of all governments'. The Authority will operate
'within policy approved by the Ministerial Council and in full
consultation with all governments through (the) Jurisdictional
Blood Committee'.(8)

The current Bill establishes the National Blood
Authority and its governing Board; provides for a General Manager
(with the power to compel production of 'blood-related
information') supported by staff and advisory committees; creates a
National Blood Account under the Financial Management and
Accountability Act 1997 to fund the operations of the
Authority; and stipulates accountability procedures that the
Authority must comply with.

Main
Provisions

Clause 7 establishes the
National Blood Authority as a Commonwealth statutory body.

Clause 8 sets out the functions
of the Authority, including (inter alia):

Liaising with governments and suppliers about blood products
and services

Planning and budgeting for the supply of blood products and
services in accordance with the National Blood Agreement

Funding the supply of blood products and services

Entering and managing contracts for the collection and
distribution of blood products and services to ensure a sufficient
supply in all States and Territories

Ensuring the safety and quality of blood products and services
in accordance with the National Blood Agreement;

Facilitating and funding research and policy development
related to blood products and services, and

Advising the Minister and the Ministerial Council on relevant
matters.

Clause 10 gives the General
Manager of the Authority the power to demand 'blood-related
information' from managers of private hospitals, suppliers and
importers of blood products and services, and any other person
specified in regulations.

'Blood-related information' includes any
information relating to the supply of and demand for blood products
and services; blood donations; the safety and quality of such
products and services and their cost; and risks to a sufficient
blood supply to States and Territories. It also includes
information relating to 'benchmarking performance' with regard to
blood products and services. The Explanatory Memorandum states that
this phrase refers to 'supplier practice and yields, supplier
costs, clinical use of blood and blood products and product
wastage'.(9)

The General Manager cannot demand 'personal
information' as defined in the Privacy Act 1988.

It is an offence not to comply with a demand for
information made by the General Manager under clause
10(10), although a person need not comply with
such a demand if it would incriminate them or expose them to 'a
penalty or other liability'. The Authority must provide 'reasonable
compensation' for compelling a person to provide blood-related
information.

Under clause 11, there is a
penalty of 2 years imprisonment for improperly disclosing
information obtained when serving as a member of staff of the
Authority or in providing services to the Authority.

Part 3 establishes the
governing Board for the National Blood Authority. Board members
serve for a maximum of 4 years and are appointed by the Minister
after selection by the Ministerial Council. The Minister must be
satisfied that the person selected by the Council as Chair of the
Board is independent from interests of either blood product
suppliers or the Commonwealth, States and Territories
(paragraph 15(1)(b)).

The Board is to include a person representing
the interests of the Commonwealth; one or two persons representing
the States and Territories, and a representative of the community.
It must also include someone with expertise in public health issues
relating to human blood, and a person with financial or commercial
expertise (clause 14). Payment for Board members
will be determined by the Remuneration Tribunal (clause
18).

Part 4 Division 1 provides for
the appointment of the Authority's General Manager by the Minister
in consultation with the Board. The person appointed is to hold the
position for a maximum term of 4 years. The General Manager must
request the Board's advice on strategic matters, and must have
regard to advice from the Board whether requested or not.

Part 4 Division 2 stipulates
that the General Manager and Authority staff together constitute a
Statutory Agency for the purposes of the Public Service Act
1999.

Part 4 Division 3 allows the
General Manager to establish advisory committees to assist the
Authority. Payment for committee members will be determined by the
Remuneration Tribunal.

Part 5 creates a National Blood
Account as a Special Account for the purposes of the Financial
Management and Accountability Act 1997. The Commonwealth is
required to credit to the Account all monies appropriated for this
purpose by the Parliament, and all amounts required to be paid by
the Commonwealth under the National Blood Agreement. The Account
can only be used to fund the operations of the Authority in
carrying out its designated functions, and for paying remuneration
and allowances under the current Bill.

Part 6 sets down reporting
requirements for the Authority, including a corporate plan and an
annual report. An annual report must also be prepared for the
Board. The reports for the Authority and the Board must be
presented to Parliament within 15 sitting days after they are
received by the Minister.

A central role of the National Blood Authority
will be to manage and fund contracts for the supply of blood
products, including plasma.(11) A key concern addressed
by the Stephen Review was the 'potential supply risks arising from
Australia's dependence on a single plasma fractionator in an
environment of strict import constraints'.(12) The
plasma supplier in Australia is CSL Limited, the former
Commonwealth Serum Laboratories, privatised in 1994 under the
Keating Labor Government.

The Sydney Morning Herald reported in October
2001 that in its first six years of privatisation the Commonwealth
paid CSL Limited more than $570 million under a 10 year Plasma
Fractionation Agreement(13) plus a further $33 million
under a diagnostics contract, noting that 'together the figures
represent almost twice the entire return the Government received
when it sold the CSL'. The article stated that based on these two
taxpayer funded agreements, CSL Limited

is now the darling of the Australian Stock
Exchange and is valued at more than $7 billion. Today it is among
the 20 largest companies in Australia almost twice as big, by
market value, as Qantas, and just behind Coles
Myer.(14)

In December 1999, the Commonwealth
Auditor-General released a strongly critical report on
Commonwealth Management and Regulation of Plasma
Fractionation,(15) a function carried out by the
then Department of Health and Aged Care (DHAC). The Auditor-General
concluded that there was 'significant scope for improvement' in
DHAC's contract management practices in relation to the Plasma
Fractionation Agreement.

An important task for the new Authority will be
to measure the extent of any improvement in management of the
Plasma Fractionation Agreement since the Auditor-General's report,
with a view to informing the Commonwealth's decision on whether to
extend the existing agreement with CSL, or to negotiate a new
agreement either with CSL or with one or more new
suppliers.(16)

On a more technical level, the power of the
Authority's General Manager under clause 10 of the current Bill to
compel the production of blood-related information raises some
issues.

The Explanatory Memorandum does not explain why
managers of private hospitals can be required to provide
information, but those running public hospitals have no
equivalent obligation (clause 10(3)(a)).

More significantly, sub-clause
10(6) states that production of information demanded by
the General Manager is not required if it 'might tend to expose the
person to a penalty or other liability'. Apart from managers of
private hospitals, persons who may be required to give information
to the General Manager include suppliers and importers of blood
products. Such people will be carrying on their business under
commercial contracts that usually include confidentiality clauses.
Therefore they will be able to claim exposure to liability for
breach of contract as a reason for not complying with a demand for
information. Although the person receiving a demand for information
will have the evidential burden of proving exposure to
liability,(17) such confidentiality clauses have the
potential to undermine the General Manager's power to obtain
relevant information on the supply of blood products and services
in Australia.

In addition, those who receive demands from the
National Blood Authority for information that is the subject of a
commercial contract may find themselves in an invidious position.
If they refuse to provide the information, they risk not being able
to establish exposure to liability, making them liable for an
offence under sub-clause 10(5). If they avoid this
risk by complying with the demand, they face being sued by the
other party to the contract for breach of its confidentiality
provisions.

Sub-clause 10(7) of the current
Bill states that the Authority must pay a person 'reasonable
compensation' for complying with a demand for information. The
Explanatory Memorandum states that such compensation 'is limited to
the administrative and duplication costs incurred when responding
to the General Manager's request'.(18) However, no such
limit is stated in the current Bill itself. While a court may have
regard to the Explanatory Memorandum, the National Blood Authority
could potentially find itself liable to pay compensation for legal
claims resulting from compliance with its demands for blood-related
information.

http://www.anao.gov.au/WebSite.nsf/Publications/4A256AE90015F69B4A25690300072819.
See eg Finding 2.37: 'There has been an absence of adequate
financial controls over payments made by DHAC under the PFA.
Between 1 January 1994 and April 1999, DHAC paid out more than $400
million of Commonwealth funds under the PFA without a formal
process in place to confirm that the products it was invoiced for
had actually been received by the designated recipients.'

This was the second inquiry by the
Auditor-General into the Plasma Fractionation Agreement, the first
being in 1995, see Audit Report No.14 1995-96, The Sale of
CSL-Commonwealth Blood Product Funding and Regulation, which
was tabled in Parliament in November 1995.

Peter Prince
5 February 2003
Bills Digest Service
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